NiSource Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: NiSource expanded its GenCo partnerships with an incremental 400 MW for Amazon and a new 340 MW agreement with Alphabet, creating an ~800 MW pooled resource that the company says will unlock roughly $1.4 billion in customer savings over 15 years (about $124/year per residential customer) and accelerate delivery timelines.
  • Positive Sentiment: The company reaffirmed 2026 consolidated adjusted EPS guidance of $2.02–$2.07, reported Q1 adjusted EPS of $1.06 (52% of midpoint), and raised long‑term EPS CAGR to 9%–10% (2023–2033) while increasing GenCo contribution outlook for 2030 and 2033.
  • Positive Sentiment: Operational execution and efficiency initiatives remain strong — NiSource reported its safest Q1 on record for employee injuries, completed extensive leak surveys and pole work, and cited AI/process improvements that have increased productivity (AI contract tools >20%).
  • Neutral Sentiment: NiSource’s five‑year base plan remains $21B (plus $2B upside) and it added ~$7.6B of GenCo/data‑center CapEx; funding is expected from operating cash, new debt, and $400M–$600M of equity annually while maintaining a 14%–16% FFO/debt target.
  • Negative Sentiment: Regulatory and policy risks persist: a federal order keeps the Schahfer coal units in service (Schahfer remains a retail NIPSCO asset, not part of GenCo), and state‑level scrutiny (e.g., Pennsylvania governor’s letter) could affect future rate recovery and timing of investments.
AI Generated. May Contain Errors.
Earnings Conference Call
NiSource Q1 2026
00:00 / 00:00

There are 13 speakers on the call.

Speaker 8

Hello, and welcome to NiSource 1st quarter 2026 earnings conference call. Please note that this call is being recorded. After the speakers' prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time, please press star followed by 1 on your telephone keypad. Thank you. I would now like to turn the call over to Durgesh Chopra, chief, Head of Investor Relations. Please go ahead.

Speaker 2

Thank you. Good morning, and welcome to NiSource's 1st quarter 2026 investor call. Joining me today are President and Chief Executive Officer, Lloyd Yates; Executive Vice President and Chief Financial Officer, Shawn Anderson; Executive Vice President of Technology, Customer, and Chief Commercial Officer, Michael Luhrs; and Executive Vice President and Group President of NiSource Utilities, Melody Birmingham. Today, we'll review NiSource's financial performance for the 1st quarter and share updates on operations, strategy, and growth drivers. We'll open the call for your questions. Slides for today's call are available in the investor relations section of our website. Some statements made during this presentation will be forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements.

Speaker 2

Information concerning such risks and uncertainties is included in the Risk Factors and MDA sections of our periodic SEC filings. Additionally, some statements made on this call relate to non-GAAP financial measures. Please refer to the supplemental slides, segment information, and full financial schedules for information on the most directly comparable GAAP measure and a reconciliation of these measures. With that, I'll turn the call over to Lloyd.

Speaker 5

Thank you, Durgesh, and good morning, everyone. We appreciate you joining us today. I'll begin on slide 3. At NiSource, our mission is to deliver safe, reliable, and competitive energy that drives value for our customers. Our disciplined capital deployment, operational excellence, and constructive regulatory frameworks remain the foundation of our business strategy. The first quarter of 2026 reflects continued execution of this strategy, supported by a robust regulatory foundation, ongoing operational improvements, and a commitment to our customers. NiSource's value proposition is anchored in regulated utility operations across 6 highly constructive jurisdictions, providing diversification in both asset mix and regulatory environment. As we continue to modernize our electric and gas infrastructure, we are delivering on our core objectives by advancing innovative solutions such as NIPSCO GenCo, partnering with Amazon and now Alphabet to recognize higher and faster savings to customers.

Speaker 5

In addition to the announcements made a few weeks ago, I am pleased to share another expansion, an incremental 400 megawatts of capacity serving Amazon. Given the present inflationary climate, the value of these partnerships is tremendous, unlocking cost savings totaling approximately $1.4 billion for our existing customers over the next 15 years. Moving to slide 4. Collaborative regulatory and stakeholder relationships while operating with excellence paves the way for NiSource to execute on its financial commitments. NiSource continues to work alongside stakeholders through regulatory processes to ensure resources are available for critical investments to protect our system, serve our customers reliably, and grow local economies, all while balancing the impact these investments have on our customers.

Speaker 5

Working collaboratively with stakeholders, we're able to support enhanced rate-making practices in our jurisdictions and advance legislative priorities, such as Indiana House Bill 1002 and Ohio Senate Bill 103, to help ensure fair, balanced outcomes for our customers and our communities. A key tenet to our operating plan is to work efficiently and improve our systems and processes, leveraging AI and technological upgrades to improve both efficiency and reliability for our customers. Today, we reported first quarter 2026 consolidated adjusted EPS of $1.06, which accounts for 52% of our projected midpoint earnings guidance.

Speaker 5

We are reaffirming our 2026 consolidated adjusted EPS guidance of $2.02-$2.07 per share. We are increasing our consolidated adjusted EPS CAGR 100 basis points for 2023 to 2033 to 9%-10% towards the high end of that range through 2030, driven by the robust portfolio of investment opportunities supporting data centers. Turning to slide 5. At NiSource, safety remains our top priority and the foundation of operational excellence. Our first quarter results reflect the strength of that commitment. We delivered the safest first quarter on record for employee injuries dating back to 2016 through strong winter preparedness and disciplined field execution.

Speaker 5

We also continue to advance our proactive risk reduction programs across the system, completing over 11,000 miles of leak survey in quarterHelping identify and mitigate 113 large volume leaks well above plan. We exceeded our targets for both electric pole inspections and replacements for the quarter, and maintained strong execution in our crossboard program, reinforcing the long-term resilience of our infrastructure. These results underscore the operational discipline of our teams and our continued commitment to delivering safe, reliable service across our footprint. The Apollo Continuous Improvement team is focused on boosting operational efficiency via programs like Fleet Focus to reduce idling and right-size fleets, streamlining IT applications, and using AI to improve permitting, invoicing, and locate screening. AI and analytics are improving NiSource's operations via the Work Management Intelligence platform.

Speaker 5

Enhanced spend visibility and supply chain enables faster procurement, while AI contract tools have increased productivity over 20%. These solutions are expanding to customer and back-office functions for greater efficiency and service quality. We continue to engage proactively with stakeholders and regulators in all jurisdictions as shown on slide 6. Our regulatory strategy is informed by thoughtful, careful consideration of customer affordability and cost pressures, ensuring we proceed in a manner that balances these concerns. As a strategic organization, we adapt to evolving sensitivities, ensuring we operate with both efficiency and effectiveness as we navigate new opportunities and challenges. We remain committed to engaging transparently throughout the regulatory process, providing timely updates to stakeholders on our investment plans and priorities only as they advance through proper channels. This approach ensures all parties are informed while respecting regulatory protocols and supporting safe, reliable service.

Speaker 5

Leveraging riders, as consistently practiced in Ohio and other states, enables us to address affordability issues for customers by minimizing the need for frequent rate cases and by better timing capital allocation and recovery. This method supports continued investment in our infrastructure, maintaining safety and reliability, while offering a balanced solution for system integrity and customer interest. We also support legislation, such as Indiana House Bill 1002, that adopts measures like levelized billing to protect customers from bill fluctuations caused by weather-related usage spikes. In Pennsylvania, we have flexibility in our plan to address system modernization at a paced method of recovery, which reflects stakeholders' feedback while also ensuring service can be safely delivered.

Speaker 5

As we prioritize supporting our communities through capital investment that ensure safe, reliable service and foster economic development, we are in an active dialogue with stakeholders to highlight the value of our partnership and investments. In March, NIPSCO was issued a second federal order requiring the continued operation of our Schahfer Coal Plant. Our plan incorporates flexibility to accommodate this directive, reflecting our commitment to full regulatory compliance while maintaining customer affordability, financial stability, and reliability. We're finding ways to drive direct savings to our customers by entering into strategic partnerships with data center customers. By leveraging the GenCo regulatory model, our agreements with Alphabet and Amazon are expected to deliver annual savings up to $124 per year for residential customers, offering greater benefits at an now accelerated timeline than initially forecasted.

Speaker 5

Our commitment remains to transparently communicate with all stakeholders, providing timely updates on regulatory outcomes, project developments, and anticipated benefits for both customers and communities. Our priority is delivering sustainable solutions that fulfill present and future demands while maintaining our promise of value and excellence in service. With that, I'll turn it over to Michael Luhrs to dive deeper into these new data center strategies.

Speaker 6

Thanks, Lloyd. I'll begin on slide 7. GenCo was designed for speed and flexibility to support growing energy demand in northern Indiana while simultaneously achieving cost savings for existing customers and driving economic growth in the communities we serve. NiSource remains steadfast in fulfilling the commitments we have made to stakeholders, regulators, and customers, and our ongoing focus ensures that promises made are promises delivered, reflecting our integrity and reliability in every aspect of our operations. We have recently made several advances on this initiative that now support $1.4 billion in customer savings. A new energy infrastructure agreement with Alphabet, 2 expansions on the Amazon agreement to accelerate and increase their service, and the creation of the pooled resources approach, which enables both new and ongoing customer needs, which I'll speak more about shortly.

Speaker 6

These developments highlight GenCo's unique, innovative approach to serving data centers by providing speed to market, shielding retail customers from investment costs, while reducing their monthly bill and strengthening shareholder value. Now on to slide 8. We're excited to be launching a new partnership with Alphabet. By employing 340 MW of pool resources, including advanced battery solutions and utilizing available market resources, we'll begin service this summer and we'll expect to achieve full ramp by 2030. This 15-year contract will provide faster access to energy than previously anticipated and accelerate savings benefits to customers. Moving to slide 9, Amazon has continued to emphasize investing in the state of Indiana, and we are very pleased to report both an expanded collaboration with Amazon by growing their ultimate investment in the state and also an accelerated timeline to deliver energy to Amazon.

Speaker 6

Over 400 MW of contracted generation will serve the enhancements to the existing Amazon data center strategy and will help our retail customers realize savings faster and ultimately grow their total bill savings up to $124 per customer per year. To support growing large load demand, we are pursuing a pooled generation strategy that allows us to efficiently develop and manage a diversified portfolio of resources accessed through GenCo, as shown on slide 10. The pool operates as an aggregation of assets similar to a traditional utility portfolio, matching large load customer demand with a flexible asset base. As we add new data center customers, the asset pool scales accordingly. This initial pool of approximately 800 MW is sized to meet load requirements plus applicable reserve margins. The pool provides flexibility to add assets over time as new customers come online.

Speaker 6

Importantly, the structure ring-fences costs and risks so that the costs associated with these large loads are isolated from our broader retail customer base and are recovered through our bilateral contracts while still allowing us to optimize resources, cost, and system reliability. The incremental and accelerated megawatts of these agreements enabled by GenCo will increase savings to existing customers. The Alphabet and Amazon investments will also drive economic development by creating new jobs, expanding the tax base, and supporting the development of a skilled workforce in Indiana. This positions the state as a leader in technology-driven growth and energy infrastructure advancement. This differentiated business model of GenCo and pool assets protects and benefits existing customers and enables us to serve new large load customers with speed and flexibility. We have a strong pipeline of opportunities to serve new and existing customers, as shown on slide 11.

Speaker 6

We are moving customers through the pipeline, progressing them from developing opportunities to strategic negotiations and into signed contracts. Even after securing approximately 800 megawatts of additional capacity to serve Alphabet and Amazon, demand remains robust. With 3 gigawatts of strategic negotiations and line of sight to approximately 2 gigawatts of developing opportunities. We believe there is a well-defined path for scaling through sustainable growth, and we are committed to pursuing it in a thoughtful and differentiated manner. As demonstrated on slide 12, we are progressing our strategy through achievement of regulatory and construction milestones. The original Amazon contract is pending commission approval and is expected in June ahead of civil site work later this year and load energization beginning in 2027.

Speaker 6

Upon IURC approval of the Amazon contract settlement, our new Alphabet and Amazon agreements will be subject to an expedited regulatory review process of 90-120 days for approval, resulting in anticipated orders later this year. We are well-positioned to execute these projects efficiently, safely, and in tandem with our ongoing operations. We remain active in the commercial supply chain to capitalize on available opportunities, and our strong Quanta partnership positions us to successfully secure skilled labor to execute. Together, these advantages enable us to deliver on our commitments and drive long-term value for our customers and stakeholders. With that, I will turn the call over to Shawn.

Speaker 10

Thank you, Michael, good morning, everyone. I'll pick up right where you left off, highlighting the advancements in our data center business. The GenCo business model offers differentiated flexibility to achieve speed to market for new customers, disciplined savings for our existing customers, and advancing economic development locally for our communities. As we pursue opportunities to serve data center customers, we have designed these strategies with multiple layers of risk protection to safeguard shareholders and existing customers. Rate structures and contractual terms are designed to provide full cost recovery and achieve appropriate risk-adjusted returns. Revenue strategies, such as minimum demand charges and long-term commitments, help establish a secure revenue floor. Credit and counterparty risk is managed through credit support requirements by diversifying exposure across highly rated counterparties. Contractual protections allocate construction, operating, and market risks to the parties best positioned to manage those.

Speaker 10

The structure is designed to ring-fence this activity from the core regulated business, preserving balance sheet strength and minimizing volatility, all while enabling disciplined capital deployment into a strategic and growing investment plan. We will continue to be thoughtful of how to best protect all stakeholders while we advance this unprecedented growth opportunity. Let's focus on slides 13 and 14 in our financial results for the quarter. First quarter consolidated adjusted EPS was $1.06, an $0.08 per share increase versus the $0.98 reported in the same period last year. This 8% year-over-year increase is primarily driven by regulatory execution across our base business, recovering capital investments from 2025's capital and regulatory plans.

Speaker 10

By achieving 52% of our midpoint earnings guidance through Q1, NiSource is well-positioned to achieve our full-year financial objectives. Shown on slide 15, our five-year capital investment remains unchanged for our base business, which includes $21 billion in investments and $2 billion in upside opportunities. Our consolidated plan is now enhanced by $7.6 billion in GenCo and data center-related capital. We are actively advancing incremental investment opportunities shown on slide 16, which include electric generation, gas and electric transmission and system modernization, MISO long-range transmission projects, PHMSA compliance, and advanced metering infrastructure. These initiatives are not part of our base or upside plans, yet they present significant potential for long-term value creation. We are actively pursuing commercialization efforts and developing the investment thesis in collaboration with stakeholders to maximize the value generated by these opportunities.

Speaker 10

Reviewing slide 17, the NIPSCO system continues to experience significant progress through consistent addition of generation capacity and with a substantial pipeline of projects underway to address growing customer needs and drive diversification in generation technology. Notably, the figure for signed GenCo contracts has increased, reflecting momentum in securing new agreements that will further strengthen grid reliability and diversification. These advancements underscore NiSource's consistent track record in delivering large-scale construction projects, positioning the company to serve a broader customer base, foster data center expansion, and advance its long-term strategic goals. Turning to slide 18, we are reaffirming NiSource's consolidated adjusted EPS guidance range for 2026 of $2.02 to $2.07 per share.

Speaker 10

We have increased our long-term guidance by 100 basis points and expect to deliver 9%-10% consolidated adjusted EPS compound annual growth through 2033, with performance tracking toward the high end of that range through 2030. We continue to demonstrate disciplined capital deployment, with GenCo expected to deliver returns that support increasing our earnings growth rate stemming from our projected 9%-11% rate-based growth. This guidance reflects our confidence in efficiently converting capital into earnings in a manner that is accretive to shareholder value. We have started 2026 strong and are confident in our plan. We are committed to keeping O&M costs steady during the planning period to ensure sustainability and reduce potential risks. Our plan remains highly executable, projecting modest customer demand of less than 1% across all customer classes and which applies conservative financing assumptions through 2030.

Speaker 10

The regulatory actions completed last year have improved our visibility into 2026 performance, aligning with the regulated revenue increases necessary to achieve our stated guidance range. Looking ahead, slide 19 reflects our improved outlook for GenCo as it is poised for incremental earnings accretion in the future years. We have increased our 2030 GenCo EPS guidance, now projecting $0.25-$0.35 per share. Our 2033 outlook is also higher, as we're now guiding to $0.40-$0.60 per share. These updates reflect our strong momentum and confidence in delivering incremental value as a result of our new and enhanced data center agreements. Slide 20 highlights our 5-year funding plans. We are reaffirming 14%-16% FFO to debt in all years of the plan.

Speaker 10

A balanced mix of cash from operations, new long-term debt, and $400 million-$600 million of equity each year is expected to further strengthen the balance sheet. This reflects a $600 million increase in our CapEx plan, the financing implications of contracted capacity, and a pipeline of investment opportunities that continues to strengthen. Based on our consistent, disciplined execution, de-risking the plan while preserving flexibility, we believe a balanced financing plan will help sustain the demand we continue to see across the pipeline. Finally, slide 21. We've had a strong start to the year and remain on track to achieve our 2026 financial targets.

Speaker 5

We are confident in our strategy and our ability to deliver sustainable value for our customers and shareholders. NiSource offers a diversified and fully regulated utility with the opportunity to invest in programmatic gas infrastructure and long-term energy transition for a fully integrated electric business. We believe continued progress, accessing unprecedented energy development and power demand resulting from robust economic development, onshoring, as well as new data center development, truly differentiates the value proposition relative to many alternatives in the marketplace today. With that, operator, please open the line for questions.

Speaker 8

We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your first question comes from the line of Shar Pourreza of Wells Fargo. Your line is now open.

Operator

Hi. Thank you. This is actually Andrew Kadak for Shar. Thanks for taking my questions. Can you talk about what you're seeing in discussions with potential customers that has allowed you to firm the 1 to 3 gigawatts in your strategic negotiations bucket to 3 gigawatts?

Speaker 5

Yes, Andrew. I can talk about that. To date, we've signed approximately 4 gigawatts as capacity for data centers. When you couple that with our current engagement with multiple counterparties and strong demand, I think those facts support our confidence in advancing the 3 gigawatts of pipeline opportunities that are in active negotiations. I think you also add to that the GenCo model represents a compelling opportunity and a competitive advantage to serve these large scale growth while benefiting our existing customer base. We're very confident in our ability to execute on that.

Operator

Thanks. With only $600 million of CapEx to serve the, I guess, incremental 1 GW of hyperscaler load, it's a, it's a pretty capital light construct. With the market capacity purchases you're making, how do you earn on those purchases? Can you give us some detail or color on how that flows through to earnings?

Speaker 5

Hey, Shawn, you wanna address that?

Speaker 10

As we think about the way that NiSource and really GenCo can create value for stakeholders, we look at the total amount of capacity that we're going to be able to generate, what the cost is for that, and what an appropriate risk-adjusted return is. When you net those two out, that's what creates the earnings per share. As you mentioned, some of that is through capacity purchases, some of that will be through constructing assets. The net of that is what we guide to in the GenCo guidance.

Operator

Thank you. I'll leave it there.

Speaker 8

Your next question comes from the line of Bill Appicelli of UBS.

Speaker 1

Hey, good morning. Just, you know, maybe along the similar lines of the question that was just asked, but I mean, when we think about the incremental needs here, you know, to service what could be part of the additional megawatts to come under strategic negotiations, I guess, you know, how do we think about that resource mix in terms of whether it's, you know, additional generation to be built? Then sort of related to that, I guess, how do we think about the incremental earnings benefit of this, right? Is this more linear? Does the accretion improve as you scale the size of the GenCo?

Speaker 5

Sean?

Speaker 10

Yeah. I don't think it's linear. I do think it's project specific and largely driven by what a customer needs and when they need it by. From there, we try to find the most attractive resource that's appropriate to serve that demand, both short-term and long-term, and the most reasonable cost to achieve that on a long-term risk-adjusted basis.

Speaker 1

Okay. I guess you'll just sort of update that, you know, as you announce, it'll be, to your point, bespoke for each deal, right, in terms of what the actual earnings benefit will be.

Speaker 5

That is correct. The GenCo model allows us to provide bespoke solutions to our counterparties. As we add to that pool, we'll make it clear that we're adding that capacity in which and how we're serving that customer.

Speaker 1

Okay. You know, under the framework of the affordability, you've increased customer benefits here today. I mean, you know, how is that resonating with the customer base, you know, with the sort of the stakeholders, both on the political and regulatory front? Maybe just speak to that, if this is being, you know, well received, or how should we think about, you know, the impacts here?

Speaker 5

We believe it's being well received by not just the customer base but the regulators. I mean, again, we keep talking about the benefits of the GenCo model, we're gonna provide $1.4 billion of benefit back to customers, which is $124 per year of real money going back to customers. At the same time, you know, we're building in the state of Indiana, we're creating jobs and benefiting the communities we serve. We think that this model is a competitive advantage, is compelling and being well received by all of our active stakeholders.

Speaker 1

Okay, I'll leave it there. Thank you.

Speaker 8

Your next question comes from the line of Steve Fleishman of Wolfe Research. Your line is now open.

Speaker 11

Hey, good morning.

Speaker 5

Morning.

Speaker 11

I guess what's kind of interesting with these two recent deals is you're providing kind of time to power availability, which obviously is hard to find and people pay for. How much more timely, like time to power the next few years access could you feasibly do? Because that clearly is something I think a lot of customers want.

Speaker 5

Michael?

Speaker 6

We haven't disclosed, like, the exact amounts of what we could do, but I will say that we continue to be very active in the commercial supply chain, and we are focused on that speed to power. We try to ensure that the capabilities, the resources, the, you know, constructs are there, everything from site development through to execution. What I would say is, at this point, though we're very focused on making sure we execute these effectively, we are also very focused on continuing to execute on that speed to power in this, you know, near term timeframe to be able to provide counterparties with what they need and feel strongly about. That's why we feel strongly about our, you know, 3 gigawatts and our strategic negotiations.

Speaker 11

Okay. Then just the 9 gigawatt total, not to get too dreamy here, but just is that some kind of limit on the opportunity in the region or, you know, maybe just on your transmission system, or is that something that could actually be larger over time?

Speaker 6

I wouldn't view it as a limit. What I would view it as is we're very disciplined and methodical in how we proceed through our pipeline and negotiations. We like to provide strong confidence in our execution and in our capabilities, and we will seek to maximize the opportunity that this can provide to stakeholders and our shareholders and our customers with what we do. I would say that Indiana is a very strong territory by which to continue to develop opportunities, given the geographics of the area, given its pro-proximity to large centers like Chicago, given the transmission system backbone that we've discussed before, that's 345 with lots of redundancy, the gas supply situation. I would look at that 9 GW as what we are focused on in that pipeline, but not what the ultimate opportunity might be.

Speaker 11

Okay. Switching gears, have to ask just on the recent Governor letter to utilities in Pennsylvania and how you're interpreting that and what does it mean for your future rate case strategy and investment in Pennsylvania, if anything?

Speaker 5

Steve Fleishman, right now, you know, I'd say we're actively engaged in Pennsylvania with all the stakeholders as we develop a response to Josh Shapiro's letter. You know, if you think about last year, we came out of December, we had a very constructive regulatory outcome for rate case, we're evaluating future regulatory mechanisms, such as looking at our trackers to support future CapEx investments. We do have mechanisms that can support future tracker investments. Our five-year financial plan that we have is built with a lot of flexibility, that allows us to adapt to both opportunities and challenges.

Speaker 5

As we work with those stakeholders to address the Governor's concerns, we will continue to emphasize the importance of safety and federal and state requirements and investments that we need to make to operate the system reliably. At the same time, we want to highlight the need to maintain a strong balance sheet to support those critical investments and then adjust accordingly. It's something that me and the entire team are engaged in making sure that we're on top of this thing. We've seen and had great experience in Pennsylvania as a constructive regulatory state, and we're going to try and understand what this means so that we can maintain and run our system efficiently and effectively.

Speaker 11

Thank you.

Speaker 8

Your next question comes from the line of Julien Dumoulin-Smith of Jefferies. Your line is now open.

Speaker 4

Hey, good morning, team. Thank you guys very much for the time. I appreciate it. Nicely done yet again, I gotta say.

Speaker 5

Good morning.

Speaker 4

Good morning, Lloyd. Maybe just to pick it up on the earnings composition question. I know not keen to disclose too much on this $0.15-$0.18 move up and guide, how do you think about bifurcating that between sort of the quote-unquote rate base and own gen portion versus contracts? Maybe the more critical question here is: How do you think about the ability to own more of that gen over time? You talk here about this 800 megawatt pool. Is that something that over time you effectively would in-house, if that's the term? Is that kind of another element of compounding growth maybe beyond the 2030-2033 period? How do you think about the evolution of your ability to own the related gen?

Speaker 5

Ev, I think that as Shawn mentioned earlier, you know, we get more customers and build what I call provide bespoke generation solutions. We will own a probably significant amount of that generation and try to provide the best solution to the customer as we negotiate these contracts. Michael Luhrs, you want to add to that at all?

Speaker 6

Yeah. What I would add to it might be helpful to talk just a little bit more about when we talk about bespoke solutions. We ensured within the GenCo model that we have the capability to serve 3,000 megawatt increments and also serve 300 megawatt increments. In doing that, we've created the capacity to do, you know, those bespoke solutions that can meet those. The pool resources that we have, that is the mechanism by which we will own all these resources that provided to NIPSCO to meet the resource adequacy. Our druthers and our focus has been to not have commodity risk or market exposure. When we go out, we are getting contracted generation capacity one way or the other. I would look at it as we own effectively all of it, you know, when we're doing it.

Speaker 6

We are bringing it into that portfolio to serve those customers in a holistic fashion with speed to market.

Speaker 10

Yeah. The only piece I'd add to this, Julien, would be, because it is not functioning directly off of a return on rate base model, the accretion dilution that we guide to both short-term and long-term, and how we think about the potential for value creation over time doesn't necessarily require us to own it. It really helps us best monetize the capacity attributes in a way that's attractive to stakeholders, both to our retail customers as we're exemplifying with the $1.4 billion in savings, as well as to our shareholders as we expect a really return on and of the cost of those assets over the life of the customer agreements and making sure that that financial stability maintains.

Speaker 4

Got it. Excellent. Then just to needle a little bit on this 3 gigawatt strategic negotiation here. How should we think about the gating items for conversion there? Is it dependent at this point on getting the approvals of Amazon and now Alphabet here? Is there some sort of, you know, serial nature to putting this in front of the IURC, et cetera? Or is it not necessarily precluded as far as you would set expectations? Obviously, you've delivered well against these targets, and seems like you still got a ways to go against that 3 gigawatts too.

Speaker 5

As I've said in the past, these are complex transactions, and these negotiations take time. I wouldn't limit these to just Amazon and Alphabet. I've said earlier in the script, and Michael said it, that we're talking to multiple counterparties here, and I think it just takes time to get these things done and to get them done correctly. We've set our organization up and structured ourselves to execute more efficiently and more effectively, and that gives me a whole lot more confidence that we're gonna get these done.

Speaker 4

Got it. Excellent. The, the, just quickly on the ATM, How much latitude do you have for more deals now that you raised the ATM range? Or is that effectively utilized with the CapEx increase here? I suspect you have some latitude.

Speaker 10

Well, yeah, we absolutely have a lot of latitude in our financing plan, the $400 million-$600 million annually that we disclosed today is already contemplated in the filed ATM structure. Therefore, we've got the capacity to handle that type of volume without impact.

Speaker 4

Awesome. Thanks, Shawn. Appreciate it, guys. See you soon.

Speaker 8

Your next question comes from the line of Eli Josien of JPMorgan. Your line is now open.

Speaker 3

Hey, good morning. Just wanted to circle back a bit to the speed to market theme that was touched on earlier. Maybe within the context of the resource mix for the pool strategy. You know, we've seen you use a mix thus far, but is there sort of a resource priority list that you have, you know, just in terms of executing that speed to market? Maybe more broadly, do you have an update on where you are in terms of land and equipment acquired for those new assets that we're adding? Thanks.

Speaker 5

Michael, mm?

Speaker 6

What I would say on the speed to market aspect is other than we try, we, you know, we make sure that we are meeting our reliability, MISO accreditation, IURC requirements, and what we need to ensure that we're good stewards of the system and what we're doing for our customer base. We try to make sure we are deploying resources and capabilities across a broad spectrum of resources and bringing them into that pool and bringing them into that resource mix to do just what you said, which is to ensure speed to market and ensure the capability to be able to provide what the customers need and what our shareholders need in returns with those. It's not a prioritization of assets within that asset pool.

Speaker 6

It's really making sure that they meet that reliability requirements, they meet the necessity for being able to have the time to market, speed to market with the customers and meeting the MISO accreditation. We are very active in that. We are very consistent in that. I think what you're seeing here and how we're growing the portfolio from having CCGTs.

Speaker 5

Having batteries, adding in additional contracted generation assets, being, you know, things that are, you know, confirming market capabilities and resources is that continued mix will continue to grow, and we will add to that.

Speaker 3

Understood. Thanks. Maybe just thinking about the upcoming IURC approval process. I know you have a very helpful slide in your deck walking through some timeline milestones, but can you just kind of provide increased color on what the next steps are procedurally and the, you know, the timeline for some of the review coming up? Maybe just to add on to that, I know there's been some discussion of development in La Porte County where there's, you know, Microsoft has been active. Those have come out in the IURC filings as well. Any color there would be helpful. Thanks.

Speaker 5

Go ahead, Mike. Mm-hmm.

Speaker 6

What I would say is slide 12, I think, is a good representative slide of the progression and the progress that we have made through our regulatory process and how we're really executing on this in a defined, sustainable, and methodical manner. You can see that as we've gone through it includes everything from, like, the zoning application approval in February, the, you know, the acceleration amendment, you know, filed with the IURC. As we mentioned before, if the settlement is approved, that would lead to an expedited approval process of these special contracts, which is 90-120 days, which just highlights another advantage of how we've structured this gen co model and the capabilities around it. We feel, you know, we have a great regulatory team. That regulatory team is working these through.

Speaker 6

We feel confident relative to these approvals and moving them through the process, and we will just continue to execute on that. You can see the dates associated with. We expect those by first half of 2026, and then moving into the actual construction phases with them.

Speaker 9

All right. Thanks.

Speaker 8

Your next question comes from the line of Nicholas Campanella of Evercore ISI. Your line is now open.

Speaker 7

Hey, good morning, guys. How's everyone?

Speaker 6

Good morning.

Speaker 7

A couple quick ones from me. Given kind of the timelines, and I think you guys might have just touched upon it, but I just wanna kinda clarify. Just given the timelines, and we kind of have the data center pipeline through 2035, I guess, and then the, it seems like the, that expedited approval process could aid this, but I just wanna be clear. When we think about those up to 2 gigawatts of developing opportunities kind of later dated, like, how quickly would we need to see those be brought into the fold of the pipeline or into kind of actually, like, signed capacity for them to actually be COD'd by 2035?

Speaker 5

I think that 2 gigawatts are what we call developing opportunities. I think that how quickly they get bought into strategic negotiations kind of remains to be seen. What I'll tell you is there's significant demand in the Indiana region for hyperscalers and data centers. I think as we think about more developmental opportunities up there, we'll study things like that. There's no real timeline for how quickly they get bought in. We have a long queue, and we have a lot of work to do. That demand is high, and we'll get to it as our resources and equipment and things allow us to.

Speaker 6

As we've mentioned earlier, we'll continue that discipline and methodology, as we discuss with the strategic negotiations, and as was mentioned in the question prior around Microsoft and that, the fact that that land in La Porte, we continue to work those opportunities in just a very methodical manner. As we do, we will continue to update, like, which gigawatts are in which portion of that pipeline of the portfolio.

Speaker 7

Got it. Thanks. Just wanted to clarify, too. There's no in the increase in guidance, there's no consideration of the 3 gigawatts in strategic negotiations embedded within that, correct?

Speaker 5

That is-

Speaker 7

That's purely up.

Speaker 5

That is correct.

Speaker 7

Great. Thanks, guys.

Speaker 8

Your next question comes from the line of Paul Fremont of Ladenburg. Your line is now open.

Speaker 9

Thanks. Great update. I guess my question is, I'd like to maybe better understand the role of, Schahfer Generation, potentially under a PPA in that 800 megawatt pool. Do you have sort of the ability for, to shift the operating costs that are now being picked up by retail customers, to the data center, customers?

Speaker 5

Today, the way we look at the Schahfer, we have, as I mentioned in my script, you know, the second 202 order, and we consider the Schahfer units part of our retail customer capacity. Our goal here is to continue to recover costs through the FERC process, and there's been no real consideration today of shifting that over into a PPA.

Speaker 9

Okay. There, the pool of resources doesn't include any surplus generation that you're now getting from the Schahfer plant?

Speaker 6

That is correct. Schahfer is not a Gen Co asset. Schahfer is a NIPSCO asset. It is not part of the pool and it is not part of those resources.

Speaker 5

Yeah. It's a regulated asset.

Speaker 9

No.

Speaker 9

There's no

Speaker 5

Go ahead.

Speaker 9

There's no PPA connection either to Gen Co?

Speaker 5

That is correct.

Speaker 6

Right. Schahfer. There are no NIPSCO base assets that are serving our existing base customers that are within the pool or PPA to the pool.

Speaker 9

I guess my next question is how long would it take to supply generation to prospective new customers? I guess that would include, you know, these two customers or the expansion of AWS and Alphabet.

Speaker 5

Remember as part of the Gen Co model, every solution is a bespoke solution and they have bespoke ramp rates, and all of those things go into consideration of timing and kind of generation we provide.

Speaker 9

Great. I guess since GenCo is growing as a % of your total contribution, when can we sort of expect to see separate financials?

Speaker 5

John?

Speaker 10

Yeah. Paul, we'll break that out once we get to a place where Gen Co is a more material contribution to NiSource's ongoing financial results.

Speaker 9

Great. That's it. Thank you very much.

Speaker 8

Your next question comes from the line of Travis Miller of Morningstar. Your line is now open.

Speaker 12

Thank you. Fortunately or unfortunately, I'm gonna follow on a couple lines of questions in your comments earlier. The pool strategy, do you need approval from the IURC for any new assets or any contracts outside of approval for just the data center contract? Essentially, are you able to serve that data center contract with any assets and purchases without regulatory approval?

Speaker 6

The existing process that we have with the IURC, as Gen Co is a regulated entity, is we file the special contracts with the IURC for approval. As we file those special contracts with the IURC for approval, we do provide them with information relative to what assets are being added to the system. The special contract is approved, that information on what assets are being added is typically within the special contract but does not require, like, a separate CPCN approval with it. The pool strategy is a mechanism by which that we're able to effectuate through Gen Co indirectly and that comes out as special contracts with counterparties that the IURC will approve, if that makes sense.

Speaker 12

Yeah, absolutely. Okay. That sounds good. One other quick clarifying. I think you might have raised this, you might have answered this earlier, but just to clarify. The 9% to 10% growth includes only the existing Amazon expansion and the Alphabet, right? None of the pipeline.

Speaker 5

That's correct. The 9%-10% growth.

Speaker 12

Okay

Speaker 5

only includes signed customer contracts.

Speaker 12

Okay

Speaker 5

no strategic negotiation.

Speaker 12

Okay. Got it. The mechanism for flowing savings back to customers, wonder if you could talk a little bit about that in terms of the $1.4 billion number, how that actually gets back to NIPSCO customers.

Speaker 6

That $1.4 billion is a defined mechanism within each special contract that distinctly lays out how those funds will be accreted and then provided back to the NIPSCO base. In the end, it is a credit against the bills of those retail customers and of those customers that are on the electric generation side for NIPSCO. It is not a volumetric reduction. It is a credit to those customers from what we're doing within these contracts.

Speaker 12

Okay, great. I'll leave it there. Thanks so much.

Speaker 8

Thank you. I'd now like to hand the call back to Lloyd Yates for closing remarks.

Speaker 5

Right. I wanna thank all of you for your questions and your continued interest in NiSource. We appreciate it. Have a great day.

Speaker 8

Thank you for attending today's call. You may now disconnect. Goodbye

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